October 28, 2005
New ranking of states' business climates for small business gives poor grades to New York
New York is ranked only 44th on the Small Business Survival Index 2005, which was released earlier this month by the Small Business and Entrepreneurship Council (SBEC). The 2005 index is the SBE Council’s 10th annual ranking of state’s climates for small businesses.
The index seeks “to gauge, state by state, whether public policies help or hurt the entrepreneurial sector of our economy, which of course is so important for economic growth, innovation and job creation,” according to Raymond J. Keating, chief economist for the SBE Council.
The 2005 Index has been revised and expanded, notably by adding four measures of health-care regulation, Keating said. "Health care costs are a heavy burden on small businesses, and those costs most assuredly are affected by government regulations and mandates.”
The Index analyzes 26 major government-imposed or government-related costs affecting small businesses and entrepreneurs, including an assortment of taxes and measures that reflect various regulatory costs. These government-imposed or government-related costs are added together to compute an overall rating. The entire report is available at www.sbecouncil.org.
The index makes possible comparisons of states in terms of tax burdens and regulatory costs, Keating said.
“Economic common sense, backed up by a large body of economic literature, makes clear that these policies matter a great deal to entrepreneurs, businesses, employees and overall economic health,” he said.
The 2005 Small Business Survival Index shows that New York has the nation’s:
- 10th-highest personal income tax rates.
- 8th-highest capital gains tax rate.
- 13th-highest corporate income tax rates.
- 10th-highest state and local property taxes (with taxes ranked
as a share of personal income).
- 25th highest state and local sales, gross receipts, and excise
taxes (ranked as a share of personal income).
- 3rd-highest electric utility costs (based on an index of state
average revenue per kilowatt hour for electricity utilities relative
to the national average).
- 18th-highest workers’ compensation premiums.
- 11th-highest number of state and local government employees
(FTEs) per capita.
- Highest state gasoline taxes.
The study also adds to the evidence showing that states with competitive business climates tend to have more robust population growth.
“From 2000 to 2004, the 25 best ranked states on the Index experienced population growth that was 56 percent faster than the worst 25 states plus the District of Columbia,” Keating said.
“Equally interesting is net domestic or internal migration, that is, movement of people between the states. From 2000 to 2004, the top 25 states on the Small Business Survival Index netted a 1.64 million increase in population at the expense of the bottom 25 states plus the District. For good measure, employment growth was much faster among the top 25 states versus the bottom 25 plus D.C.”
Small Business Survival Index 2005: State Rankings
|1 South Dakota||26 North Dakota|
|2 Nevada||27 Wisconsin|
|3 Wyoming||28 Kentucky|
|4 Washington||29 Oklahoma|
|5 Michigan||30 Utah|
|6 Florida||31 Kansas|
|7 Mississippi||32 Nebraska|
|8 Alabama||33 New Mexico|
|9 Indiana||34 West Virginia|
|10 Colorado||35 Louisiana|
|11 Texas||36 Connecticut|
|12 South Carolina||37 Oregon|
|13 Virginia||38 Montana|
|14 Pennsylvania||39 North Carolina|
|15 Tennessee||40 Ohio|
|16 Arkansas||41 Iowa|
|17 Arizona||42 Massachusetts|
|18 Missouri||43 Vermont|
|19 Idaho||44 New York|
|20 New Hampshire||45 New Jersey|
|21 Alaska||46 Hawaii|
|22 Georgia||47 Minnesota|
|23 Illinois||48 Rhode Island|
|24 Delaware||49 Maine|
|25 Maryland||50 California|
51 Dist. of Columbia